Earnings Release Q3 Robert Hobbs Chief Executive Officer Kristian K. Johansen Chief Financial Officer
Forward-Looking Statements All statements in this presentation other than statements of historical fact, are forwardlooking statements, which are subject to a number of risks, uncertainties, and assumptions that are difficult to predict and are based upon assumptions as to future events that may not prove accurate. These factors include TGS reliance on a cyclical industry and principal customers, TGS ability to continue to expand markets for licensing of data, and TGS ability to acquire and process data products at costs commensurate with profitability. Actual results may differ materially from those expected or projected in the forward-looking statements. TGS undertakes no responsibility or obligation to update or alter forward-looking statements for any reason. 2
Q3 Highlights Record high net revenues of 244.8 MUSD, up 53% from Q3 Strong profitability with operating profit for the quarter of 101.3 MUSD, 41% of net revenues, up 66% from Q3 Continued high investment activity with new investments of 137.8 MUSD, up 25% from Q3 Vessels under TGS control through charter during all or parts of Q3 included five 3D vessels and one wide-azimuth crew An additional five 2D vessels and one 3D vessel were involved in joint ventures with others during Q3 Three land crews were working for TGS during Q3 Arcis consolidated from Q3 integration on schedule Full year guidance revised pre-announcement made 8 October 3
Net Revenue Breakdown Q3 GPS 7% 2D 16% GPS 10% Q3 2D 19% 3D 77% 3D 71% Q3 Proprietary 3% Proprietary 10% Q3 Prefunding 40% Prefunding 34% 4 Late sales 57% Late sales 56%
Net Revenue Breakdown AMEAP 21% Q3 Other 9% NSA 39% AMEAP 18% Other 15% Q3 NSA 28% Europe 31% Europe 39% 5
Financials Kristian K. Johansen Chief Financial Officer 6
Key Financials 240 220 200 180 160 140 120 100 80 60 40 20 0 178 9 142 132 136 11 11 85 98 26 37 27 Q4 2010 Q1 Q2 Net Revenues 160 15 91 146 54 Q3 181 5 30 Q4 191 4 113 75 Q1 215 6 109 245 7 139 100 99 Q2 Q3 120 100 80 60 40 20 0 81 Q4 2010 EBIT before non-recurring items 59 Q1 58 Q2 61 Q3 82 Q4 89 Q1 94 Q2 101 Q3 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Prefunding Late sales Proprietary EBIT EBIT Margin Cash Flow from Operations Multi-client Investments (operational) 200 180 160 140 120 100 80 60 40 20 0 119 138 Q4 2010 Q1 93 Q2 66 Q3 189 Q4 147 144 Q1 Q2 129 Q3 180 160 140 120 100 80 60 40 20 0 40 44 Q4 2010 Q1 62 Q2 111 Q3 61 Q4 101 Q1 162 Q2 138 Q3 7
Q3 Income Statement USD million, except EPS Q3 Q3 Change in % Net operating revenues 245 160 53% Cost of goods sold - proprietary and other 1 5-74% Amortization of multi-client library 44% 106 71 48% Gross margin 138 83 66% Other operating expenses 32 20 59% Cost of stock options 1 0.6 57% Depreciation 4 2 133% Operating profit 41% 101 61 66% Net financial items 1 0.3 361% Profit before taxes 42% 103 61 68% Tax expense 30 19 56% Net income 30% 73 42 73% EPS, Undiluted EPS, Fully Diluted 0.72 0.42 0.71 0.41 73% 73% 8
Q3 Cash Flow Statement USD million Received payments Payments for operational expenses Net gain/(loss) from currency exchange Paid taxes Operational cash flow Investments in tangible and intangible assets Investments in multi-client library Proceeds from sale of short-term investments Interest received Interest paid Purchase of own shares Q3 Q3 176 101-100% Proceeds from share offerings 3 2 74% Change in cash balance (17) (18) -7% (30) (15) 129 (25) (3) (2) (147) - (0.1) - (1) 1 (0.3) (9) 66 (77) 0.2 0.6 (0.1) (8) Change in % 75% 17% 455% 66% 97% 42% 92% -100% 67% -16% 9
YTD Income Statement USD million, except EPS 9M 9M Change in % Net operating revenues 651 428 52% Cost of goods sold - proprietary and other 2 13-83% Amortization of multi-client library 42% 268 168 60% Gross margin 380 247 54% Other operating expenses Cost of stock options Depreciation 85 63 2 1 9 5 35% 59% 70% Operating profit 44% 284 178 60% Net financial items 0.0 1-99% Profit before taxes 44% 284 179 59% Tax expense 84 52 60% Net income EPS, Undiluted 31% 201 126 59% 1.97 1.24 59% EPS, Fully Diluted 1.95 1.22 60% 10
YTD Cash Flow Statement USD million Received payments Payments for operational expenses Net gain/(loss) from currency exchange Paid taxes Operational cash flow Investments in tangible and intangible assets Investments in multi-client library Investments through mergers and acquisitons Proceeds from sales of short-term investments Interest received Interest paid Dividend payments Purchase of own shares Proceeds from share offerings Change in cash balance 9M 9M 570 (80) (75) (3) (68) (62) 420 297 (17) 3 77% (0.4) (0.2) 109% (103) 435 (1) (9) (378) (169) (76) (44) 16 4 1 (93) - (23) 5 15 (131) (20) Change in % 31% 6% 135% 9% 41% 85% 124% 73% 292% 11% -100% -68% 545% 11
Balance Sheet USD million Assets Cash equivalents Financial investments available for sale Other current assets Total current assets Intangible assets and deferred tax asset Other non-current assets Multi-client library Fixed assets Total assets Liabilities Current liabilities Non-current liabilities Deferred tax liability Total liabilities Equity Total liabilities and equity Q3 Q2 Change in % Q4 205 222-8% 336 4 4-8% 19 404 341 18% 278 612 192 17 567 195 17 8% -2% 0% 632 156 14 671 31 637 32 5% -4% 511 20 1,523 1,447 5% 1,333 307 311-1% 218 33 100 35 99-7% 1% 29 113 440 445-1% 360 1,084 1,523 1,002 1,447 8% 5% 973 1,333 TGS has no interest bearing debt 12
Investments per Vintage Net Book Value (NBV) in % of original investment (year-end) vs allowed maximum % (year-end) 20700 % 3 % 600 572 100 % 500 400 62 % 300 258 299 200 100 0 4 % 0 % 20 % 16 % 132 40 % 25 % 2008 2009 2010 WIP 60 % 30 % 152 41 % 167 100 % Original investments Maximum allowed NBV (year-end) Net Book Value 13
Net Revenues vs. Net Book Value per Vintage 70% 62% 60% 57% 50% 40% 30% 20% 10% 0% 18% 13% 12% 10% 8% 6% 4% 4% 2% 2% 2% 0% pre-2008 2008 2009 2010 WIP Net revenues Net book value 14
Operational Highlights Robert Hobbs Chief Executive Officer 15
License Round Activity and TGS Positioning Northeast Greenland: Pre-round for Kanubas Consortium - bids due 15 December Ordinary Round opens 15 June 2013 and closes in Oct 2013 Norway: 22 nd Round bids due 4 December with awards in early summer 2013 APA application closed 6 September Canada Newfoundland: Flemish Pass opened 5 April. Laurentian Sub Basin opened 9 March. Bids on both areas due 1 Nov Canada Nova Scotia: Opened 30 April and bids due 7 Nov New 5 Year Plan: H2 Western Gulf of Mexico: 28 Nov United Kingdom: UK 27 th round bids closed1 May Sierra Leone: License round closed 30 March Liberia: Ultra Deep Round expected in 2013 Central Gulf of Mexico: 20 March 2013 Brazil: Round 11 announced for May 2013 pending congress passing laws on royalty sharing Indonesia: First Petroleum Bidding round awarded 25 May Pre-Salt announced for Nov 2013 Expected Announced Australia Acreage release announced May Second Petroleum Round Launched 9 October offering 23 blocks: direct proposals due 27 Nov regular tenders closed 19 Feb 2013 16
Q3 3D Operations Kansas Crew Saskatchewan Crew Ohio Crew RamformViking Polarcus Amani Polar Duchess Polarcus Adira WAZ Crew Geco Eagle Ramform Sterling 17
Q3 2D Operations Akademik Shatskiy Osprey Explorer Sanco Spirit Akademik Fersman Polar Explorer 18
Current Onshore Surveys United States Firestone 3D - expanded to 658 km 2 in liquid rich Utica play Bucklin 3D - 421 km 2 of 3D data in Mississippi Lime Oil Play Wellington 3D - 510 km 2 of 3D data in the Mississippi Lime Oil Play Canada Neptune South - 218 km 2 of 3D data in the Bakken Oil play Unity North - 130 km 2 of 3D data in the Birdbear play of Western Saskatchewan Cameron River - 461 km 2 of 3D data in the liquids rich Triassic Montney and Doig unconventional fairways Legacy 3D Data - 12,689 km 2 19
Australia Continued Expansion Mary Rose 8,800 km 2 Acquisition complete April Mary Rose NE 3,500 km 2 Acquisition complete April Gnaraloo 2,300 km 2 Acquisition complete April Honeycombs 2,500 km 2 Acquisition complete October TGS portfolio of 3D multi-client coverage in Australia exceeds 17,000 km 2 20
Northeast Greenland activity - NEG12* 3,660 km 2D data in Northeast Greenland 2013 licensing round: Greater than 7,900 km of data inside the Kanumas licensing round area Additional TGS data available in NE Greenland: 10,000 km of 2D data Aeromagnetic and gravity data Sea bottom sampling Basin studies and reports *In partnership with Fugro 21
Eastern Canada Growth Labrador Sea* 22,000 km multi-client 2D survey offshore Newfoundland in the Labrador Sea Newfoundland Flemish Pass* 20,000 km multi-client 2D survey over Northeast Newfoundland Shelf 7,500 km acquired in and the remaining in the 2013 season * In partnership with PGS and utilize GeoStreamer technology 22
Europe 3D Activity During Barents Sea: Nordkapp Fault East (NKFE12) -1,403 km 2 Finnmark Platform (FP12) -2,483 km 2 Northern North Sea: End of the World (EOTW11 and EOTW12 ) - 15,307 km 2 Erlend Basin (EB 12) - 3,178 km 2 Erlend West (EW 12) - 1,539 km 2 West of Shetland Faroe Shetland Basin (FSB12)* - 2,755 km 2 *In partnership with PGS 23
Northwest Africa Mauritania expansion 11,256 km 2D* Acquisition to complete in December Total data now available 17,395 km 2D* 2,567 km2 3D *In partnership with Dolphin Geophysical 24
Clari-Fi - Broadband Original processing Processing methodology that increases bandwidth and improves imaging May be applied to conventionally acquired pre- or post-stack data Addresses ghost and filtering effects Opportunities for reprocessing of existing library Strengthens technology offerings on new projects Clari-Fi 25 Data from West of Shetlands
Outlook Robert Hobbs Chief Executive Officer 26
Backlog Historical Backlog (MUSD) 2008 250.0 241.7 210.9 200.0 188.0 150.0 132.0 125.6 131.8 152.8 107.6 98.1 106.4 116.8 109.9 124.4 134.3 152.6 100.0 50.0 - Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Backlog declines as record summer investments completed 27
3D Marine Acquisition Capacity Secured EUR AMEAP NSA Option Vessel Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ramform Sterling Honeycombs Viking Vision Mary Rose NW Australia Geo Atlantic Mary Rose NE. Gnaraloo Geco Eagle Angola Option WG WAZ Crew Ramform Viking Patriot (GOM) Independence FSB12 Polar Duchess FP12 EB12W EW12 Polarcus Amani/Adira MF11 EOTW12 Polarcus Samur EB12 Atlantic Explorer SVG11 28
2D Marine Acquisition Capacity Secured EUR AMEAP NSA Option Vessel Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sanco Spirit Canada Osprey Explorer Akademik Shatskiy Akademik Fersman NBR12 - NW Europe NSR12 - NW Europe Greenland 12 Russian Arctic Colombia Artemis Atlantic W-Africa Polar Explorer W-Africa 3D Land Acquisition Capacity Secured Land Crew Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Kansas Crew 1 Bucklin - Kansas Kansas Crew 2 Ohio Crew Welllington - Kansas Firestone- Ohio Canada Crew (Neptune) Canada Crew (Unity) Canada Crew (Cameron River) 29
Summary Record high revenues in Q3 of 244.8 MUSD (up 53% Y/Y) Operating profit of 101.3 MUSD, 41% of net revenues (up 66% Y/Y) Operational investments of 137.8 MUSD backed by prefunding of 72% Strong seismic demand in all key markets allows TGS to update guidance: Multi-client investments 425 475 MUSD Average pre-funding 60 70% Average multi-client amortization rate 41 47% Net revenues 870 910 MUSD Contract revenues less than 5% of total revenues Full year 2013 guidance will be announced second week of January 2013 30
TGS Performs in all Cycles ROCE vs. Seismic Peers EBIT Margins vs. Seismic Peers 100% 80% 80% 60% 60% 40% 20% 0% -20% 40% 20% 0% -20% -40% -40% -60% -80% -100% -120% 2007 2008 2009 2010 TGS Peer Range Peer Average -60% -80% -100% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TGS Peer Range Peer Average ROCE consistently outperforming peers Average EBIT margin above 40% Stable EBIT performance through the cycles * ROCE is based on EBIT divided by average capital employed. Peer group includes CGG Veritas, Fugro, Geokinetics, ION Geophysical, PGS, Western Geco, and GGS Source Platou Markets and TGS 31
Thank You www.tgs.com 32